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NextEra Touts Gexa's Smaller Texas Market Share Vs. TXU In Application To Acquire Oncor

October 31, 2016

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Copyright 2010-16
Reporting by Paul Ring •

NextEra Energy, Inc. and Oncor Electric Delivery Company LLC have filed an application at the Public Utility Commission of Texas for approval for NextEra to acquire Oncor, which touts NextEra's smaller retail market share, compared to TXU, in addressing affiliate concerns

"NextEra Energy’s proposed acquisition of Oncor presents far less market concentration than existed under EFH’s ownership. The market share of NextEra Energy’s retail affiliates in Texas is a quarter that of TXU Energy. In contrast to EFH’s ownership of Luminant, NextEra Energy subsidiaries have one-sixtieth the effective installed generating capacity in ERCOT and no generation facilities that are interconnected with Oncor’s electric delivery system. NextEra Energy is nonetheless committing that no NextEra Energy electric generation facilities will be interconnected with Oncor’s electric delivery system in the future without prior Commission approval," the applicants said

NextEra said TXU Energy sells electricity to approximately 1.7 million residential and business customers, and is the single largest REP by customer count in Texas. TXU Energy serves approximately 25% of the residential customers and approximately 17% of the business customers in the areas of the ERCOT market that are open to competition, NextEra said. TXU Energy had-total sales of about 41 TWh in 2015, which is approximately 12% of sales in the total ERCOT retail market, NextEra said

In the Oncor area specifically, TXU Energy had sales of about 29 TWh in 2015, which represents approximately 25% of all sales in Oncor's service area in 2015, NextEra said. Further, TXU Energy served approximately 1.3 million customers or approximately 37% of all customers in the Oncor service area during December 2015, NextEra said

NextEra Energy owns two retail subsidiaries that participate in ERCOT retail markets: (1) Gexa Energy, LP (Gexa); and (2) NextEra Retail Texas, LP (NRT). An additional NextEra Energy affiliate, NextEra Energy Power Marketing, LLC (NEPM) is also registered as an Option 2 REP, although it is not currently serving any customers.

These NextEra subsidiaries collectively sold approximately 9 TWh of energy and thus served approximately 3% of the ERCOT market in 2015, NextEra said

NextEra owns 2,893 MW, or 3.2 percent of the installed capacity in ERCOT on a nameplate capacity basis. The effective installed generating capacity of NextEra subsidiaries in ERCOT is approximately 281 MW, or 0.31% of the total installed generating capacity located in ERCOT

In contrast, NextEra said that Luminant owns and controls approximately 16,177 MW of electrical generating capacity in ERCOT, or approximately 18% of the total installed generating capacity in ERCOT

NextEra commits under the application that no generation facilities owned by NextEra Energy or its subsidiaries or affiliates are currently interconnected with Oncor's electric delivery system. NextEra Energy commits that no electric generation facilities owned by it or its subsidiaries or affiliates will be interconnected with Oncor's electric delivery system without the prior approval of the Commission.

Among regulatory commitments proposed under the application, NextEra commits that Oncor shall maintain a name and logo separate and distinct from the names of its Texas competitive affiliates. For the sake of clarity, Gexa and other Texas competitive affiliates will not use the Oncor name or logo, nor will Oncor engage in joint marketing, advertising, or promotional efforts with any Texas competitive affiliate, in a manner that is inconsistent with the Public Utility Regulatory Act and the Commission’s affiliate rules, NextEra said

NextEra further commits that so long as Oncor is affiliated with Gexa and NextEra Retail Texas, Oncor will not seek to recover from its customers any costs incurred as a result of a bankruptcy of Gexa or NextEra Retail Texas.

NextEra Energy also commits that subsidiaries that are competitive affiliates of Oncor shall not exercise voting rights on a matter before the ERCOT Board of Directors or ERCOT Technical Advisory Committee.

NextEra and Oncor are not seeking to change Oncor's rates in change-in-control proceeding and no changes to Oncor's Tariff for Retail Delivery Service or Tariff for Transmission Service are being proposed as a result of the proposed transaction.

NextEra commits that Oncor will file a general base rate case by July 1, 2017, unless before that date a general base rate case has been initiated by Commission Staff or some other party

NextEra is not proposing that any customer credit, mandated to be passed through to customers by retail electric providers, as a condition of the transaction, such as the credit required under Oncor's 2008 change in control.

Docket 46238

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